Units and revenue needed to cover fixed and variable costs.
Break-even units
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Break-even revenue
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Contribution per unit
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Your breakdown
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Break-even is the line between losing money and making it
Every business carries costs that do not move with sales, the rent on a Kwun Tong unit, salaries, software subscriptions, and costs that rise with each item sold, the materials and the packaging. Break-even is the sales volume at which the money left over from each sale, after the variable cost, finally adds up to cover the fixed costs. Sell one unit fewer and you are in the red; one more and you start banking profit. This tool finds that point in units and in dollars, and it is built for a founder pricing a product, a cafe owner sizing a lease, or anyone testing whether a side venture can wash its face.
Contribution margin does the heavy lifting
The single most useful number here is the contribution margin: the selling price minus the variable cost per unit. It is what each sale contributes toward the fixed pile before any profit. Divide your fixed costs by that margin and you have the units needed to break even. If the margin is zero or negative, meaning the price does not cover the variable cost, there is no break-even point at all, because selling more simply digs the hole deeper. That is the first thing to check before anything else, and the tool flags it for you. A thin margin also makes you fragile. When each unit contributes only a few dollars, you need a huge volume to cover the fixed costs, and a small rise in the variable cost can wipe the margin out. A fat margin gives you room to absorb cost shocks and discounts, which is one reason higher-margin businesses are far easier to run profitably.
Pricing a $120 product against $180,000 of fixed cost
Imagine fixed costs of $180,000 a year, a selling price of $120 a unit, and a variable cost of $45 a unit. The contribution margin is $75 per unit. Dividing the fixed costs by that margin gives the break-even volume, and multiplying by the price gives the revenue you need to get there:
So you must sell 2,400 units, or $288,000 of product, before the business turns a profit. Every unit beyond that adds $75 straight to the bottom line. The chart traces total cost against revenue, with the lines crossing exactly at 2,400 units.
Where break-even quietly misleads people
Two traps catch first-time founders. First, the model assumes price and variable cost stay flat, but in practice bulk discounts, a weaker Hong Kong dollar on imported materials, or a price cut to win share will all shift the line. Re-run the figures whenever those change. Second, break-even covers costs but leaves you with nothing for yourself, so a founder usually wants a target-profit version: add your desired profit to the fixed costs before dividing. The tool gives the pure break-even, which is the right starting point, then you layer your own profit goal on top.
Does break-even include tax?
No, and it should not. Break-even is a pre-tax operating measure. Profits tax in Hong Kong only applies once you make an assessable profit, so it sits above the break-even line, not inside it. Work out the volume to break even first, then estimate tax on whatever profit you make beyond it.
How do I handle a business that sells many different products?
Use a blended contribution margin. Work out the average margin across your sales mix, weighted by how much of each product you expect to sell, and feed that single figure in. It is an approximation, so revisit it if your mix shifts toward higher or lower margin lines.